HMM (formerly Hyundai Merchant Marine), the nation's largest deep-sea container shipping company, posted its largest quarterly performance since its establishment with an operating profit of more than 1 trillion won in the first quarter of this year.
HMM recorded 1.193 trillion won in operating profit in the first quarter of this year, compared to the same period last year. Sales rose 85% to 2.428 trillion won.
This is the largest quarterly performance since Hyundai Merchant Marine, the predecessor of HMM, was founded in 1976, especially its operating profit surpassed last year's total (980.8 billion won).
Considering that domestic shipping companies have been suffering from deficits over the past decade or so, the general response is that HMM's "earning surprise"is surprising. This is why HMM has pulled the domestic shipping industry out of the swamp of a long-term recession.
The start of the Korean shipping industry 'unfortunate' dates back to 2008-2009 when the global financial crisis hit. At that time, major shipping companies such as Maersk and MSC entered a "flight chicken game"by increasing the size of ships in the face of a recession.
However, domestic shipping companies such as Hanjin Shipping and Hyundai Merchant Marine failed to keep up with this trend. In particular, the crisis worsened when Hanjin Shipping, the country's No. 1 and world's seventh-largest shipping company, went bankrupt at the end of 2016 due to liquidity problems.
Due to the bankruptcy of Hanjin Shipping, which had a 3% global market share, Korea's shipping volume fell from 1.05 millionTEU (1TEU is a 20-foot container) in early 2016 to 460,000TEU at the end of 2016, and its shipping ranking fell out of the top 10.
Hyundai Merchant Marine also survived the transfer of management rights from Hyundai Group to the Korea Development Bank, but it was not enough to escape the swamp of the deficit.
However, the government has invested since 2018 to revive the Korean shipping industry on the verge of collapse, showing signs of a turnaround. The government established a "five-year plan to rebuild shipping" in 2018 and established the Korea Maritime Promotion Agency to support Hyundai Merchant Marine's order of 20 mega-sized ships (24,000 TEU 12 and 16,000 TEU 8).
Super-large ships can greatly reduce the cost per unit, which can determine the competitiveness of shipping companies. In addition, Hyundai Merchant Marine started anew as HMM and joined the world's top three shipping alliance 'Alliance' last year.
HMM has increased operational efficiency by introducing 12 world's largest 24,000 TEU container ships within the alliance. In addition, shipping companies adjusted their shipping volume in the aftermath of the COVID-19, and freight rates soared to two to three times higher than usual due to a surge in volume from the second half of last year.
In the end, the domestic shipping industry was able to revive due to the government's investment, improved operational efficiency of shipping companies, increased volume, and soaring freight rates.
Reporter Lee Ji-sun stockmk2020@gmail.com
